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Market Now Pricing In $770 Billion Increase In Fed Balance Sheet

Tyler Durden's picture




 

As we have pointed out previously, the primary if not only driver of relative risk returns (because in a world of relative fiat value destruction, it is all relative, except for gold which is revalued relative to all on a pro rata basis), will be who of the big two - the Fed and the ECB - can print more. And up until now, at least since the end of December when the market "suddenly" realized that the ECB's balance sheet has soared to unseen records, the consensus was that it was the ECB that would be the primary source of easing. Especially when considering that there is another ~€500 billion LTRO due on February 29. Yet today's rapid reversal in the EURUSD, driven by Bernanke's uber-dovish comments suggest that something has changed and that the Fed is now expected to ease substantially. How much? For that we look to the latest balance sheet cross-correlation, where if we go by simple correlation, the market is now pricing in (based on the EURUSD cross ratio) that the relationship of the two balance sheets will rise from a multi year low of 1.08 as of a few days ago to 1.15, at least based on the rapid move in the EURUSD higher as can be seen in the chart below. Indicatively, the actual value of the two balance sheets is €2.706 trillion for the ECB and $2.92 trillion for the Fed (or a 1.08 ratio). So now that the EURUSD has risen as high as it has, it implies that the pro forma "priced in" ratio is about 1.15. But wait: one should also factor in the fact that the ECB's balance sheet will rise by at least another €500 billion in just over a month, which will bring the ECB's balance sheet to €3.2 trillion. Which means that to retain the 1.15 cross balance sheet relationship, the Fed's own balance sheet will have to rise to $3,687 billion, or a whopping $767 billion increase!


Naturally, that's a simple heuristic based on only what the EURUSD pair is implying. Of course, this is not a scientific way of predicting where Bernanke will go, but that is at least what the market seems to be telling us. If the LTRO is much bigger, such as the €1 trillion suggested by CLSA, then the ratio changes, but €500 billion is probably far more realistic at this point.

So at the end of the day, the balance sheets of the world's two biggest central banks will increase by about €500 billion for the ECB and ~$770 for the Fed and $655 billion for the ECB.

Incidentally, this analysis assumes all else equal which, with Greece on the verge of default and Portugal potentially in its footsteps, isn't... 

Thus our question is: gold is not on its way to $2000 yet why again?


 

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Wed, 01/25/2012 - 17:02 | 2097588 Boilermaker
Boilermaker's picture

It'll be as large as it needs to be to squeeze some more life out of this farce.

Wed, 01/25/2012 - 17:03 | 2097590 MillionDollarBonus_
MillionDollarBonus_'s picture

 

Silver hasn’t even regained support at 35 dollars, EVEN after such a dovish FOMC  – that is a complete JOKE. **LOL**

Silver supply is literally SURGING with these inflated prices. Producers can’t wait to off-load their expensive silver into the greedy hands of redneck silverbugs. It’s only a matter of time before silver reaches FAIR VALUE at $18/oz, much to the dismay of redneck doomers and conspiracy theorist lunatics.

 

Wed, 01/25/2012 - 17:06 | 2097604 trav7777
trav7777's picture

until silver peaks, it will be subject to the slings and arrows of industrial demand's fickle nature.

That said, the good side effect of all this real inflation is that people are going to be eating less.

That will do more to "solve healthcare costs" than anything these moron congressidiots can.

Wed, 01/25/2012 - 17:12 | 2097643 SheepDog-One
SheepDog-One's picture

Screw 'healthier sheeple' let them cholesteral and fat themselves to death, who cares? 

Wed, 01/25/2012 - 18:01 | 2097851 TruthInSunshine
TruthInSunshine's picture

C'mon, Bernank!

WTF!

770 billion?

That's all you have in the pipeline for now? That won't keep the repository of wealth known as stock market indices from collapsing before November 2nd, you rookie.

That's weak, Cochise. Keynes & Krugman fart in your general direction.

My Fractional Reserve CERN-Megatron Money Multiplier derived equations instruct that a 2.37 trillion USD QE3 wad (over a 6 month time frame, as in full throttle) will have to be fired off in order to have even a 25% chance of replicating the devastating affects of was a 600 billion USD QE1.

I thought The Bernank was a pro?

Maybe Marc Faber was right after all. Maybe The Bernank is an amateur money printer.

 

Marc Faber: "Next Week We Will See If Bernanke Is A True Money Printer or Just An Amateur

 

 

Wed, 01/25/2012 - 18:03 | 2097883 SheepDog-One
SheepDog-One's picture

I'm surprised the algo-bots didnt throw a tantrum over this meager number....maybe theyre still digesting it.

Thu, 01/26/2012 - 00:33 | 2098795 economics1996
economics1996's picture

This shit sucks.

Thu, 01/26/2012 - 02:19 | 2098930 Manthong
Manthong's picture

OT but..  Any of you German types know if there is anything to this? ..

http://beforeitsnews.com/story/1675/079/Germany_To_Phase_Out_Cash_August_2012.html

Thu, 01/26/2012 - 04:53 | 2099002 Nachdenken
Nachdenken's picture

Happening already.  Bank cards have chips for cash transactions and checkout counters are recommended to have electronic transaction registers. Regulations for low or no note and coin transactions are not yet in place at the commercial bank level.

Thu, 01/26/2012 - 06:40 | 2099042 smlbizman
smlbizman's picture

ot, but....wal-mart getting rid of overnight greeters.....a few thoughts:

1) i hate going into any store were some unknown fuck inquires about my life,..

b) in effort to improve profits we have eliminated x amount of minimum wage jobs...

iii) is this the ultimate tsunami animal heading to the hills?

          

 

Thu, 01/26/2012 - 07:50 | 2099073 Michael
Michael's picture

I hear there's going to be a self immolation of one or two US soldiers in front of the Whitehouse during this Feb 2nd veterans march for Ron Paul and in protest of the wars. I wonder if the lamestream media will cover this event?

http://www.youtube.com/watch?v=s1hbemJojqI&feature=youtu.be

 

Wed, 01/25/2012 - 18:11 | 2097915 TruthInSunshine
TruthInSunshine's picture

The Bernank has announced the 770 billion was just the warm up run, after all.

Go, Bernank, Go!

 

Fed's Bernanke says will consider additional QE if the conditions warrant it

01-25 15:32: Fed's Bernanke says will consider additional QE if the conditions warrant it

Wed, 01/25/2012 - 22:30 | 2098536 The Monkey
The Monkey's picture

I am long 30 year treasuries and 3X short the S&P.  94% of my assets are in these two positions.  Come and get me.

Thu, 01/26/2012 - 00:58 | 2098862 falun bong
falun bong's picture

They're brass , and are the size of cantaloupes

Wed, 01/25/2012 - 22:37 | 2098557 The Monkey
The Monkey's picture

Only pussies jawbone.  Print.  Just... Do... It...

 

Wed, 01/25/2012 - 17:26 | 2097713 Eally Ucked
Eally Ucked's picture

For long time I expected some positive post from you, you're right on man!

Wed, 01/25/2012 - 17:31 | 2097750 Comay Mierda
Comay Mierda's picture

why so much angst?  haven't been butt-loved recently?

Wed, 01/25/2012 - 17:50 | 2097831 SAT 800
SAT 800's picture

Short Mar Silver from $33.245 today on the Comex; we'll see how this works out. Taking profit on my $27.00 Long, reported here on the day I put that on.

Wed, 01/25/2012 - 17:58 | 2097866 RockyRacoon
RockyRacoon's picture

Paper shuffling works... until it doesn't.

You're a stooper showing off his find.

Wed, 01/25/2012 - 18:18 | 2097945 SAT 800
SAT 800's picture

Did you have to take a vow of celibacy too? as well as the vow of poverty, and the hair shirt? I've never understood the psychology, personally.

Thu, 01/26/2012 - 03:43 | 2098973 MsCreant
MsCreant's picture

Tell it to MF Global clients, you know, the ones with the segregated accounts. Rocks is just tryin to help... 

Thu, 01/26/2012 - 08:01 | 2099082 nmewn
nmewn's picture

Some people enjoy the paper chase.

The buying of tax software, the keeping up with the latest tax policy changes on investment, the wash sale rule, the filing, being compelled to sign something under penalty of perjury (that one has always been weird), the warm interaction with different bureaucrats sometimes lasting for years over minute details.

I've never understood the psychology either ;-)

Wed, 01/25/2012 - 18:09 | 2097911 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

think it will rally to 35-36 before a pull back

Wed, 01/25/2012 - 19:16 | 2098081 Spastica Rex
Spastica Rex's picture

But think of what that might do to McDonalds!

Wed, 01/25/2012 - 22:42 | 2098573 disabledvet
disabledvet's picture

i agree food security is a concern here. No one is reporting on how the Greeks are actually living...or few actually. Homelessness has soared, crime, begging in the streets. If that's success then what exactly is failure? And if you feel like inserting "like a give a phuck" as a follow on...by all means...cuz you people don't even know where your food comes from...but the people who are making it sure do.

Wed, 01/25/2012 - 17:06 | 2097605 SheepDog-One
SheepDog-One's picture

Silver has no 'support' here? Looks great to me...then again I bought most all of my silver back at the first bailout when silver was $6-$8.

Wed, 01/25/2012 - 17:28 | 2097731 trav7777
trav7777's picture

ah, the days when I scored 100 ASEs for $652

Wed, 01/25/2012 - 17:35 | 2097738 kito
kito's picture

sheepie, where have you been during todays fireworks?!? more promises at the magic qe3 trough!!! look at them pigs lining up!!! whats that? its empty?!?!?? gasp!!!?? no ACTUAL qe3?!?!? just more hints and innuendo??? cant be!!!

Wed, 01/25/2012 - 18:01 | 2097880 SheepDog-One
SheepDog-One's picture

Yep, but apparently 'good enough' to continue 'full retard' at least 1 more day.

Wow theyre getting desperate out there.

I heard supersonic jets start getting squirrely to handle above 55,000 feet when oxygen gets real scarce.

Wed, 01/25/2012 - 19:18 | 2098082 Spastica Rex
Spastica Rex's picture

My forays to the stratosphere in my flight simulator confirm that.

Wed, 01/25/2012 - 21:34 | 2098417 trav7777
trav7777's picture

not o2, density altitude

Thu, 01/26/2012 - 00:16 | 2098755 cranky-old-geezer
cranky-old-geezer's picture

 

 

I heard supersonic jets start getting squirrely to handle above 55,000 feet when oxygen gets real scarce.

It's not about thin O2, it's about thin air and reduced lift, barely enough lift to keep it flying unless going REAL fast.

With airliners it happens at lower altitude, around 38,000 ft.  Barely enough lift in that thin air to keep that heavy jet flying.  A sizeable control surface change can kill enough lift to make it drop like a rock down to denser air a few thousand feet below and lift is regained.

It's why airline pilots are advised to leave it on autopilot at high altitude.  AP makes tiny little control surface changes that won't affect lift.

Great examples of this phenomenon in the book "Airframe".

Also verified on Flight Simulator in Boeing 777 (about 250 hrs logged).

Wed, 01/25/2012 - 18:09 | 2097907 slewie the pi-rat
slewie the pi-rat's picture

i share your Q, S_D1!

i read the goldSeek closing report yest, and trader dan said according to his calculations (and i usually agree w/ dan) we needed a close above mid-32 to complete the technical break ^^thru the MDA so this is now confirmation, according to him, i would surmise

NB gold did not lead here:  Ag broke thru first (mon) and Au followed today, also by % gain

so, tyler is high on gold, and that's fine, and he may be right about the "cause" being "implied QE"  but after 6 months, maybe he should wait another 5-6 more till prez0 gets rollin and the "market" shows its love for him

yes! resistance now = support @ mid-32 zone

been a while for us too, eh?  i've been wrong since the last drop and incorrectly "calling" the seasonal pre-Xmas hi-probability ramp.  ooops!  being wrong has not 'cost' me 10 cents, tho.  imagine that! paper value went south, is all.  if i must have some cash, the bullion is there.  other than that, PMs are "not for now"

GSR = 51.5- what's next?  maybe a nice afternoon bike ride?  L0L!!!

Wed, 01/25/2012 - 21:59 | 2098461 new game
new game's picture

slewie-ALWAYS a nice day for a bike ride!

YTD up 19.5 percent...

i say no more

except

Got silVer Bitchezz

Wed, 01/25/2012 - 17:09 | 2097611 Rakshas
Rakshas's picture

Yep that's what's happening alright.... delivery time more than doubled for my last order; I wish those fargin producers would just fuck off with all the market flooding already.....

If I don't get those spoons out on time there'll be hell on.....

 

 

Oh yeah...... SILVER BEECHES!!

 

 

 

 

Wed, 01/25/2012 - 17:07 | 2097612 peekcrackers
peekcrackers's picture

the sale is over soon on silver ...

Lets see how the paper dose with zirp

Wed, 01/25/2012 - 22:45 | 2098580 disabledvet
disabledvet's picture

you mean "interest rates do with ZIRP." there are whales in this ocean too.

Wed, 01/25/2012 - 17:08 | 2097622 Long-John-Silver
Long-John-Silver's picture

I remember when Meth man was calling for $5 silver. He no longer posts here. When Silver is above $50 will you disappear too?

Wed, 01/25/2012 - 17:14 | 2097657 Hippocratic Oaf
Hippocratic Oaf's picture

One can hope

Wed, 01/25/2012 - 23:27 | 2098679 Goldilocks
Wed, 01/25/2012 - 17:09 | 2097624 LongSoupLine
LongSoupLine's picture

 

 

" – that is a complete JOKE. **LOL**"

 

 – I am a complete JOKE. **LOL**  (fixed it)

Wed, 01/25/2012 - 17:11 | 2097625 GeneMarchbanks
GeneMarchbanks's picture

No such thing as fair value with ZIRP.

Wed, 01/25/2012 - 17:18 | 2097667 peekcrackers
peekcrackers's picture

GeneMarchbanks  plus 1

There is negative value >

 negative reserves banking  system ..the New frontier

Wed, 01/25/2012 - 17:40 | 2097786 Manthong
Wed, 01/25/2012 - 22:47 | 2098587 disabledvet
disabledvet's picture

how come only one dollar bills? why not hundreds instead? or is that...too much money?

Wed, 01/25/2012 - 17:10 | 2097628 homersimpson
homersimpson's picture

Looks like MDB took over Robotard for dumbest troll of the year.. and it's only Jan.

Wed, 01/25/2012 - 17:17 | 2097669 AC_Doctor
AC_Doctor's picture

MillionDufusBoner strikes again with his pragmatic precious metal insults.  The only thing surging is your record of ignorance regards pm's.

Wed, 01/25/2012 - 17:30 | 2097745 trav7777
trav7777's picture

you can say what you will about those of us who draw your ire, but we draw eyeballs.

You people (lemmings) would totally KILL this website if left to your own devices.

Wed, 01/25/2012 - 17:42 | 2097805 tmosley
tmosley's picture

lol, you are lumping yourself in with the satire characters now.

Fucking HILARIOUS.

Wed, 01/25/2012 - 21:36 | 2098421 trav7777
trav7777's picture

yet when I'm not around you fucking ASK FOR ME by name...you're like the jane in a bukkake

Wed, 01/25/2012 - 22:07 | 2098472 tmosley
tmosley's picture

Where exactly did I "ask" for you?

Get over yourself, and this homoerotic thing you seem to have for me.

Wed, 01/25/2012 - 22:49 | 2098592 disabledvet
disabledvet's picture

we do need more girls around here. tis true....

Thu, 01/26/2012 - 00:36 | 2098801 Eireann go Brach
Eireann go Brach's picture

Trav you are fucking pathetic! Go make out with your mum and go back in the basement!

Wed, 01/25/2012 - 22:47 | 2098588 Calmyourself
Calmyourself's picture

Let me get this straight, your a lawyer and you just wrote that, for what purpose? Holy hell, I hope your not a criminal defense lawyer..

Wed, 01/25/2012 - 17:43 | 2097810 Kaiser Sousa
Kaiser Sousa's picture

So if u bought it when it was $10 an oz. It's all bad right?????
Dude, shut the fuck up please......

Wed, 01/25/2012 - 18:14 | 2097929 AL_SWEARENGEN
AL_SWEARENGEN's picture

US gold production gains 2.6%, silver declines 8.7% in 2011

 

http://www.commodityonline.com/news/us-gold-production-gains-26-silver-declines-87-in-2011-45494-3-1.html

 

Right cause there's just SO much extra Silver out there,, the price just can't wait to drop to $18 per oz?  Stupid statements like that will simply get you labeled a COCKSUCKER!

Wed, 01/25/2012 - 20:54 | 2098306 Stax Edwards
Stax Edwards's picture

I don't doubt if you are correct, I really don't know one way or the other.  Many of my comments regarding silver are assuming that much of the hearsay found here at ZH is correct.  One thing I could never figure out is if the biggest silver cheerleader is trying to convince producers to hold back supply to drive prices higher (I don't know this to be true but it has been stated here repeatedly by our silver guys) that might be a sign that a commodity price is being "cornered" and that holding off on purchases might be a good idea.  That being said I promise I too will buy some silver next time it drops below 25 bucks an oz.  Hell why not get a monster box, just cuz I wanna be in the club too.

I do want to draw attention to the fact that you state US production declines 8.7%.

With some risk of pissing our silver aficionados off, I present the following data (up to 2009).  I have seen similar in chart form (growing annual production) but this came up in my google search first.

http://minerals.usgs.gov/ds/2005/140/silver.pdf

Emphasis on the far right column.  Is this accurate?

 

 

Wed, 01/25/2012 - 21:47 | 2098441 trav7777
trav7777's picture

that's UNITED STATES production, idiot...we're a minor player in both markets.

Production peaked for both in the US a LONG time ago.

Wed, 01/25/2012 - 22:52 | 2098599 disabledvet
disabledvet's picture

alright, phucker. Gensler vs Fleckenstein. Who's your money on? I'd go with Fleckenstein...unfortunately we all now know Gensler cheats....

Wed, 01/25/2012 - 18:29 | 2097983 Banjo
Banjo's picture

 

 

Silver hasn’t even regained support at 35 dollars, EVEN after such a dovish FOMC  – that is a complete JOKE. **LOL**

Silver supply is literally SURGING with these inflated prices. Producers can’t wait to off-load their expensive silver into the greedy hands of redneck silverbugs. It’s only a matter of time before silver reaches FAIR VALUE at $18/oz, much to the dismay of redneck doomers and conspiracy theorist lunatics.

 

I'll take silver and gold over wood pulp, turned into parchment and inked with a central planning committee numbers.

Recent average Cumulative price of silver

2009 $14.67

2010 $20.19

2011 $35.12

 

So is the the central planner in you dictating the "fair" price at $18.00? Why don't you go open a mine and sell it at your centrally planned price rather than at marke price. After all it's only $5.00 per oz to dig out of the ground right?

 

You are an epizoon in economic evolution, where you can only exist by extracting your sustinence in your centrally planned dogmatic outlook and foisting this by BRUTE FORCE on others. Free market forces would eradicate your worthless life draining existance.

 

Wed, 01/25/2012 - 22:55 | 2098605 VisualCSharp
VisualCSharp's picture

If you take silver and gold over wood pulp, why do you then list the prices of silver in wood pulp? By doing so you are admitting an equivalency between the two. You can't have it both ways. Either you are happy with some supply of silver because you are confident in its inherent value (hint: things in nature have no value except what man ascribes) or Federal Reserve Notes are how you actually measure your happiness.

Thu, 01/26/2012 - 03:32 | 2098965 Banjo
Banjo's picture

Currency is but the means of determining exchange values between all goods and services. There is nothing inherintly wrong or bad in the concept of currency, quite the contrary this is a major advance in human economic evolution.

 

A free market driven currency would be superior to a centrally planned politburo driven system of finding relative exchanges between goods and services. If you read the history of metallic currency, you will find central planners attempting to FIX the price of gold or silver either in relation to each other or in relation to units of currency in circulation caused strains in the sysems of exchange. Peter L. Bernstein. The Power of Gold, the history of an obsession. NOTE: This author looks unfavorably on gold silver as a means of currency modulation.

 

The dollars I quoted and contrasted exist, that is self evident. Similarly silver, gold, oil, wheat, taxi rides, movies, dentist, car wash, retaurant and other commodities, goods and services also exist.

 

The quotation of cumulative silver prices juxtaposed against centrally planned wood pulp YES is an equivalent. Just as if I quoted silver prices against teddy bears, haircuts or licorice would be an equivalent. Do you understand? I am not denying the existance of paper money as one way of determining exchanges.

 

The equvalence shows the relationship over time between the two things being compared. If you understand this then you will understand why I choose (at this time not necessarily forever) to hold gold and silver over centrally planned wood pulp and digitised fiat currency. Below I will create some tables of equivalent values that might tease out the meaning of my example more clearly

 

Year     -- 5% Dollar Holing   -- Dollar eqivalent Silver 1oz

2009    $14.00                     $14            

2010    $14.70                     $20.19       

2011    $15.44                     $35.12

 

Stated another way

Year   --Unit silver 1oz    -- One Dollar eqivalent YOY change

2009   1                        1

2010   1                        1.4421 (loss of 44.21% dollar value)

2011   1                        1.7395 (loss of 73.95% dollar value)

 

All that is now required is to add a third and other colums with big macs, taxi rides, teddy bears etc and work out the relative values of exchange, between holding dollars over silver and indeed these items in relation to each other.

 

My contention is that at this juncture it is superior to hold silver over CENTRALLY PLANNED FIAT ENFORCED paper and digitised currency. However if YOU choose to hold these centrally planned dollars in favor of the commodity. I say simply one thing.

 

Good luck. You may in fact over time end up ahead on the basis of relative exchanges. I do not believe this will be true. Realise also that equivalence is not "the same" :)

 

One final thing I will add is that my belief is that everything in nature has intrinsic value. It is man that attempts to attach a price based on his current understanding as the value of a thing. Unless you are omniscient how do you know the value of oil or any natural commodity tomorrow?

 

For example 500 years ago oil may have had limited human price value. Natures intrinsic value in that oil was always present just not realised. Clean water, arable unpolluted land, fresh air, forest all have some natural intrinsic value. To state that some element has no natural value is to make a statement that you are equivalent to a god as you know the future and that element can be removed for all time as it serves no purpose.

 

How can anyone know what any natural element is doing as part of the overall system we habitate, and the treasures that this element might hold? The hubris express is monumental and large part why our intelligence combined with fear and greed, could lead to our demise as a species on this planet. Wisdom is not lacking it's is a difficult proposition to sell in the face of inane IQ draining commentary such as your feeble attempt of understanding of money and nature. Imbecillic would perhaps be the closest succinct summation of your contribution today.

 

 

 

 

 

 

 

Thu, 01/26/2012 - 06:50 | 2099047 Al Gorerhythm
Al Gorerhythm's picture

Been here 2 years aand 7 weeks. In that time I have read some pretty dumb statements but this ranks on par with the dumbest. Exceptional, in line for MOY award (and yes Trav, you, VCSharp and MDB have drawn eyeballs, but having drawn them to your printed thoughts, it is impossible to undo and you are stuck on record as being either shallow or dumb as dogshit).

Wed, 01/25/2012 - 22:57 | 2098612 disabledvet
disabledvet's picture

which one's? "the one's"?? "the twenty's"? "the hundreds"?
http://www.youtube.com/watch?v=Lx_9gHAz7ao&feature=player_detailpage
man, i gotta learn to play the ukele.

Wed, 01/25/2012 - 18:49 | 2098020 Johnny Yuma
Johnny Yuma's picture

OneDollarBonus_, you should just stop posting on this site. You need to learn how to read a chart, it may help you avoid to look like such an amateur... 

Wed, 01/25/2012 - 19:18 | 2098083 MassDecep
MassDecep's picture

MDB LOL,

As long as you hold the GLD and the SLV, they have almost complete control over Silver and Gold. Hey MDB do you really think the price of these PM's are supply and demand? I hold GLD and SLV just to get basement bargain prices on the physical, LOL...

We need Sheeple like MDB to continue spewing the rhetoric so we can store up supplies at a bargain price. Do you think the custodians of these accounts are on the up and up? LOL

 

Wed, 01/25/2012 - 20:30 | 2098258 Bansters-in-my-...
Bansters-in-my- feces's picture

MillionDollarBonus....
Let me start by saying ,you make me fucking puke....
You sack of shit.
You know fucking well that silver is "managed" as is gold.
Fuck off and die,douchebag

Wed, 01/25/2012 - 22:12 | 2098484 GubbermintWorker
GubbermintWorker's picture

Really? Well, I sure am glad that my DCA is a lot less than $18/ounce. Guess you were a little late if that happens, eh? But, dumb ass, I don't think you're going to see $18 an ounce silver again.

Wed, 01/25/2012 - 17:04 | 2097595 SheepDog-One
SheepDog-One's picture

And then what.

Wed, 01/25/2012 - 17:11 | 2097636 Boilermaker
Boilermaker's picture

SD1, there is no 'and then what'.  You keep trying to apply old rules and laws to a totally different game.  They'll change, re-write, and create laws and rules as they go to perpetuate it.  What will it look like?  Hell, I don't know.  But, believing that there will be some sort of correction back to normalcy is delusional (albeit noble).

They've already crossed the barriers of pushing the limits.  The limits were breached long ago.  They have NO CHOICE but to simply double, triple, quadruple, quintuple, or whatever down over and over and over.

I have something else to tell you, the bull market wasn't real either.  Everything since the gold standard was erased in the 70s has been nothing more than a sham.  The sham must continue.  The sham will continue.  And, it will be more extreme, bizarre, ruthless, and horribly 'unfair' as it goes.

I'll be the first to pick up a pitchfork and torch but, come on, they can pull this bullshit for probably another decade.  Who the hell is going to stop them?  Why would they?

Wed, 01/25/2012 - 17:14 | 2097656 SheepDog-One
SheepDog-One's picture

I dont buy the normalcy bias premise that 'this is what theyre just going to keep doing on and on' at all. Something else big is being planned for and set up, and we dont know what it is. I guarantee when it happens one morning everyone will be here saying 'WOW I didnt see that one coming'.

Wed, 01/25/2012 - 17:32 | 2097757 trav7777
trav7777's picture

there's nothing PLANNED DUDE.  Figure that out.  NOBODY IS IN CHARGE.

There are no potent directors; it's why that is the name of a fallacy!

Make as much as you can and get off the train.  Who knows what the future holds but it isn't going to be better than today.  You're warned.

Wed, 01/25/2012 - 17:38 | 2097787 kito
kito's picture

based on your future, what does one hold to protect ones assets after getting off the train?

Wed, 01/25/2012 - 17:53 | 2097838 LawsofPhysics
LawsofPhysics's picture

The same thing you would want when getting off the train in any other lawless society.  Lawyers, guns and money.

Wed, 01/25/2012 - 18:12 | 2097917 kito
kito's picture

lawyers in a lawless society?

Wed, 01/25/2012 - 18:14 | 2097930 tmosley
tmosley's picture

Of course.  We've got plenty of lawyers, don't we?

Lawyers are the ones that allow the rich to get around the rules that "are only meant for the little people".

Wed, 01/25/2012 - 18:24 | 2097968 kito
kito's picture

last i checked this country is choc full of attorneys and plenty of laws to feed off...sense the correlation there tmos?

Wed, 01/25/2012 - 18:27 | 2097977 tmosley
tmosley's picture

Plenty of laws, and yet we are lawless.

Like being adrift in the middle of the ocean.  Laws, laws everywhere, but no rule of law to be found.

Wed, 01/25/2012 - 19:07 | 2098058 Moe Howard
Moe Howard's picture

Plenty of laws for you the peasant or piss ant. Of course, none of the laws apply to "them" because there is no controlling legal authority. Like having a President that is not a Natural born citizen. So what? WTF are you, the pissant, going to do about it?

Like you steal $5 from walmart and the black suited cops in tactical gear will beat you bloody and lock you up for a year, take your kids away, and take your car and home. Joo bank CEO robs trillions, gets fined 1.1 million, and does not admint guilt.

That's called a lawless society. Plenty of laws, just not for them.

Wed, 01/25/2012 - 21:05 | 2098344 Stax Edwards
Stax Edwards's picture

+1 Greenie

This is one of your better comments Tmos.

Thu, 01/26/2012 - 01:18 | 2098890 GoinFawr
GoinFawr's picture

haha! Save that one Tmos!

Wed, 01/25/2012 - 17:53 | 2097846 SAT 800
SAT 800's picture

Silver. For Real. I'm serious. Been serious for twenty years. All my real savings that are going to the grandchildren are in bullion. It's real money.

Wed, 01/25/2012 - 22:57 | 2098613 VisualCSharp
VisualCSharp's picture

Only as real as your fellow man believes. If I said "fingernail clippings are money!" then I'd be crazy... unless a large number of other people agreed. Think a bit deeper.

Thu, 01/26/2012 - 01:39 | 2098895 GoinFawr
GoinFawr's picture

No. Like fiat currencies you'd have to force people under threat of violence to use fingernail clippings for trade. The PTB wouldn't like it at all anyway: everyone has access to fingernail clippings.

IMO, you're the one who needs to have a good think or two.

Try starting here,

If no one was pointing a gun at your head, which would you value more highly:

a) An incredibly useful item that you know for a fact that someone had to work to procure

or

b) A bit of paper that says someone, sometime, might have done, or might do, some work at some point, unless they happened to have access to a printing press paid for by you, in which case they got it for less than nothing.

(?)

Thu, 01/26/2012 - 07:03 | 2099048 Al Gorerhythm
Al Gorerhythm's picture

RE my earlier post stating that your earlier comment was the dumbest I'd read in a long time........ I was mistaken. You just topped it. 

Take your own advice and do some reasearch so that you can think deeper. Answer this question: What is money?

Follow up by answering the next: What are the 5 properties of money? (ie. What things must be able to do for users, for it to be deemed money? Not currency, money. There is a distinction.)

Don't take too long now, you are being left behind.

 

Wed, 01/25/2012 - 17:43 | 2097809 SheepDog-One
SheepDog-One's picture

Youve got to be on crack to believe the events have just unfolded totaly unscripted and day to day...its all been planned, the 'collapse' of 2008 was a total scam to scare everyone into beginning the monetization of the debt, plain and simple its ALL planned and youre an idiot if you actually believe theyre just flying by the seat of their pants day after day.

Wed, 01/25/2012 - 17:48 | 2097824 tmosley
tmosley's picture

Put a large number of individuals in a bad system and evil emerges.  Evil far greater than was the intent of any one individual within the system, even if individuals try to manage the system.

Read up on the Stanford Prison Experiment, specifically Zimbardo's role as warden.

This is the inevitable result of a system based on ever more violation of natural rights.

Wed, 01/25/2012 - 18:14 | 2097926 SAT 800
SAT 800's picture

Of course this is correct. Human brains contain a story module that is forever occupied trying to make a story that fits whatever inputs it has; but there isn't any story; "the Powers", who are almost entirely powerless, are just winging it from week to week. They are often surprised at the result of their acouncements, etc. There's no plan.

Wed, 01/25/2012 - 18:55 | 2098028 SheepDog-One
SheepDog-One's picture

Youre delusional. Your mind is the one making events fit into 'normalcy bias' and believing its all just reacting to problems no one saw coming at all, much less planned....delusion.

Wed, 01/25/2012 - 21:50 | 2098446 trav7777
trav7777's picture

no, you are the delusional...paranoid too.

You need to look up normalcy bias because it doesn't gel with your usage of it

Wed, 01/25/2012 - 22:23 | 2098512 tmosley
tmosley's picture

You must read off of your psych evaluation to find insults for the fine people here.

How pathetic.

Wed, 01/25/2012 - 18:24 | 2097969 KickIce
KickIce's picture

It's all planned.  Fiat vs fiat yields a relative strength measure for currencies and allows them to play one against the other and print to infinity, it's the only thing holding up the ponzi.

Wed, 01/25/2012 - 23:01 | 2098624 disabledvet
disabledvet's picture

good warning. we are being watched however. "the eye" is upon us:
http://www.youtube.com/watch?feature=player_detailpage&v=-0MYwPyWoRM

Thu, 01/26/2012 - 00:43 | 2098820 Slartebartfast
Slartebartfast's picture

Sounds like a central planner cracking the bullwhip.  Hopelessly.  Pathetically.

Really kid, you ought to spend more time on your XBox.  You can't make money at it, but at least it doesn't rot your soul like working for The Morgue does.

Wed, 01/25/2012 - 17:46 | 2097704 SheepDog-One
SheepDog-One's picture

There is no 'and then what'? Well speaking of 'market realities', theres only 1 reason for a pump and thats the ensuing dump. 'The sham will continue....the sham must continue'....BAH nonsense. People are all normalcy bias and cognitive dissonance today, Stockholm Syndrome set in hard...everyone having sympathy and admiration for their captors.

Anyone who just thinks this goes on and buying into it thinking theyre on the side of avg joe retail will wake real sad one morning.

Wed, 01/25/2012 - 17:48 | 2097733 SheepDog-One
SheepDog-One's picture

OH and btw where did I ever say 'theres going to be some kind of correction to 'normalcy'? What?

Seems youre reading things into what Im saying that arent there...this has all been set up, monetizing the debt, and theres not much more of that left to do. 

Just watch out for the big false flag event that wipes everything out from left field one morning is all Im saying.

Wed, 01/25/2012 - 23:03 | 2098629 disabledvet
disabledvet's picture

Where? I say "Newt Gingrich polling strong" is a big deal. Why would anyone (other than the media and Newt himself of course) find that fascinating?

Wed, 01/25/2012 - 17:12 | 2097645 slaughterer
slaughterer's picture

Sorry, the Bernanke was about as perma-dovish today as he was at the last news conference--using some of the same exact phrases from the past playbook.  Did we get QE3 in the meantime?   All we got were the usual "we are monitoring the situation" "if conditions change, we will discuss additional asset purchases" "we have additional tools in our toolbox"  promises, not meant to be acted upon.  I fail to see the need for the QE X hype cycle with this degree of blatant MOPE.   In addition, Bill Gross will only talk his book, loaded as it is with tons of MBSs he was hoping to dump on the Fed, and now cannot.    One Black Swan of 2012 will be the firing of Bill Gross and the ascension of Mohammed El Erian to the sole throne of PIMCO--the Allianz boys have had enough of Bill.  

Wed, 01/25/2012 - 17:23 | 2097693 X. Kurt OSis
X. Kurt OSis's picture

Telegraphing rates is the functional (and politically more palatable) equivalent of QE3.  If you read this post, this is QE3 to the tune of roughly $767,000,000,000.00.  (I like actually writing the zeros.  It makes it look so much more rediculous).

If we add explicit policy rates to the policy equivalent of QE1, 2, 2.5, and now 3, I reckon we end up with an implied policy rate of approximately -7%.  The Taylor Rule would imply a policy rate of about 0.50% so that puts us 7.5% below the Taylor Rule policy rate (back of the envelope of course).

All of that to prop up a 2 handle on GDP growth.  Most of us agree we are doomed.  We are inching closer to the conclusion every minute.  Any day now.

Wed, 01/25/2012 - 18:45 | 2098014 slaughterer
slaughterer's picture

I understand what you are saying X. Kurt OSis, but I retain my inviolable right to short this bullshit news event.  Implied policy rates notwithstanding no asset pruchase program was announced today, and will not with SPX above 1300.  I am now a card carrying member of the Janjuah bear army again after today"s ridiculous sycophantic market reaction to the big Other with a cold and nervous disorder (BB).  

Wed, 01/25/2012 - 19:42 | 2098144 X. Kurt OSis
X. Kurt OSis's picture

"Markets can stay irrational longer than you can stay solvent."

-John Maynard Keynes

I'd play this bullshit market by going long vol instead of short beta. You would be slightly less likely to be punched in the gut. Volume has cratered. I just can't figure how volatility could fall much further in this breadthless market.

Wed, 01/25/2012 - 19:51 | 2098163 X. Kurt OSis
X. Kurt OSis's picture

P.S. One this is an absolute certainty. You can never short interest rate ever again. Like ever. I'm looking at you, Gross.

If rates ever do backup at this point, it will be the end game and you want have time to close those shorts and even if you do the dollars you made won't be good for more than wiping your ass or burning in your furnace.

Wed, 01/25/2012 - 23:07 | 2098641 disabledvet
disabledvet's picture

why short when you can "let them expire worthless"...like an option? i've never understood the need to "go all in against the Federal Government." Leave it to the various Governors of the 50 States. I say "plot and scheme who you're gonna send flowers to on Valentines Day" and leave it at that. (And no...that's not meant as some type of Mafia reference. I mean "to someone you love." A girl comes to mind.)

Wed, 01/25/2012 - 19:16 | 2098080 Moon Pie
Moon Pie's picture

And that will be when Oil (UNCH today, essentially) drops below $80 a barrel.  How much more QE and AirCraft carriers can there be?

It can't get any more artificially priced, can it?

Wed, 01/25/2012 - 19:23 | 2098096 slaughterer
slaughterer's picture

$100 Crude = no recovery + no QE.  Easy as that.  

Wed, 01/25/2012 - 19:33 | 2098119 X. Kurt OSis
X. Kurt OSis's picture

The Fed has gradually pancaked the entire front end of the curve but there is still plenty of room to go. The curve pivoted off of the 5 year today (in 10 basis points today). But its still pretty steep out past the intermediate ranges. Plenty of room for more QE's.

It seems strange to me that breakevens were unchanged today. TIPS don't seem to have caught up the more negative economic outlook.

Don't take my advice. But this version of QE seems potentially a less sterilized version of QE.

P.S. $80 oil is never gonna happen with this going on.

Wed, 01/25/2012 - 17:30 | 2097734 whatsinaname
whatsinaname's picture

30 year & 10 year RECOIL this afternoon - closing almost unchanged ?

Wed, 01/25/2012 - 18:01 | 2097867 X. Kurt OSis
X. Kurt OSis's picture

Impact duration of QE3?  2 hours. 

By that math, QE4 will have to be $1.5 trillion to impact the market for 1 hour.  Therefore, to have a lasting 6 month effect, QE5 will have to be :$6,480,000,000,000,000.00.  That's only 6,480 trillion dollar bills to be printed.  Zimbabwe don't got shit on us.  U S A, U S A!!!

Wed, 01/25/2012 - 23:10 | 2098647 disabledvet
disabledvet's picture

where do i get one of these pieces of...ahem..."legal tender for all debts private and public."

Thu, 01/26/2012 - 07:22 | 2099058 tired1
tired1's picture

Is this a race to the botom of the toilet bowl or what?

Thu, 01/26/2012 - 07:46 | 2099069 defencev
defencev's picture

What shit Bernanke is doing is totally unwarranted. The only reason for him to move is to make sure that Marxist Obama is reelected (and Bernanke himself continue as chair of Fed). The result of it will be as expected: temporal inflation of asset prices, plunge of Dollar and couple of new revolutions (based on food and oil price hikes). Speculants(me included) definitely make some money. Other than that nothing else going to change. It is so pathetic that Bernanke (appointed bureaucrat) and Marxist Obama are given a card blanche to destroy the country...

Wed, 01/25/2012 - 17:03 | 2097589 ZeroChance
ZeroChance's picture

Au, bitchez!

Wed, 01/25/2012 - 17:05 | 2097601 iDealMeat
iDealMeat's picture

careful..  a margin call is just itchin to kick your golden nuts.

Wed, 01/25/2012 - 17:17 | 2097615 SheepDog-One
SheepDog-One's picture

Runnin out of wiggle room there for more margin increases to hammer down PM....already has to be around 100%.

Then again I dont really care...called it when they started in with bailing the banks talk and sopped up PM's back then.

Wed, 01/25/2012 - 17:49 | 2097828 kito
kito's picture

id be surprised if they decided to let a margin call ruin the few remaining customers in futures post mf global debacle.....

Wed, 01/25/2012 - 17:06 | 2097603 Long-John-Silver
Long-John-Silver's picture

Beans, Bullets, and Bullion Bitchez!

Wed, 01/25/2012 - 17:12 | 2097647 Rakshas
Rakshas's picture

Bean, Bullets, Bullion and Bitches, Bitchez

fixed it for ya.....

 

....well somebody has to carry the other stuff,  shits heavy.... 

Wed, 01/25/2012 - 17:19 | 2097677 SheepDog-One
SheepDog-One's picture

At least the bitchez are apparently keeping their asses trim with all the Lulu spandex workout gear, so they can be admitted into the harem. Long as they can also work some magic with rice and red beans.

Wed, 01/25/2012 - 19:40 | 2098135 Colombian Gringo
Colombian Gringo's picture

Don't forget busty babes.

Wed, 01/25/2012 - 22:52 | 2098600 Calmyourself
Calmyourself's picture

http://bulletsbeansandbullion.blogspot.com/

Good web spot, interesting reading on all types of preparedness, financial, security, food..

Wed, 01/25/2012 - 17:04 | 2097592 Money never sleeps
Money never sleeps's picture

Better start buying euros and draghmas at Armada Markets or any other place. These morons will kill the buck.

Wed, 01/25/2012 - 17:04 | 2097594 wandstrasse
wandstrasse's picture

Spandau Ballet: Gold

http://youtu.be/ntG50eXbBtc

Wed, 01/25/2012 - 17:05 | 2097598 Scoted
Scoted's picture

More Surreal than 2 tabs, 1 e and 10 pints!

Wed, 01/25/2012 - 17:05 | 2097600 Gene Parmesan
Gene Parmesan's picture

"Billions" don't impress me anymore in stories like this. Let me know when it's a cool trillion.

Wed, 01/25/2012 - 17:05 | 2097602 GeneMarchbanks
GeneMarchbanks's picture

'Thus our question is: gold is not on its way to $2000 yet why again?'

Er.. the CB leasing?

Wed, 01/25/2012 - 17:10 | 2097626 SheepDog-One
SheepDog-One's picture

How long can suspension of disbelief go on? A day, week, month....who knows what their plan is? But its certainly not 'keep doing this forever', we're a bit brighter than to believe that.

Thu, 01/26/2012 - 07:58 | 2099077 tired1
tired1's picture

Been asking the same thing for a few years now. But seriously, one has to personally and individually suspend disbelief to begin to comprehend the magnitude of the global fraud, and then what? How does one bail out of the system when that's all you know?

This crap hasn't happened in the US for generations and the history of the Great Depression has been muddied. OTOH, Eusopeans and Asians I incounter abroad (mostly) know quite well what is occuring.

Wed, 01/25/2012 - 17:06 | 2097606 trampstamp
trampstamp's picture

watch out below!

Wed, 01/25/2012 - 17:11 | 2097642 Goldilocks
Wed, 01/25/2012 - 18:59 | 2098037 Rakshas
Rakshas's picture

.....and then there's the FED.... roll one and chill...

 

http://www.youtube.com/watch?v=DcJz4eJwLwc

 

Wed, 01/25/2012 - 17:21 | 2097637 LongSoupLine
LongSoupLine's picture

 

 

$770B today...$4T tomorrow.

 

At this point, the only solution is for Tyler to launch ZH into the mainstream.  The Fed and others (read: Treasury, banks, Congress, regulators, shill media) will continue to do what they do to the citizens of our country as long as they continue to treat us all like mushrooms (we all know the analogy).  We need to get the voting majority out of the dark!  Tyler, get a ZH with the Stars, or ZH Idol going...ohhh, maybe Housewives of ZH!

Seriously folks...WE are to blame...crooks will be crooks for as long as they can get away with it.  Don't expect them to "do the right thing".

Wed, 01/25/2012 - 17:31 | 2097742 Conrad Murray
Conrad Murray's picture

Housewives of ZH. Epic.

 

Cashier: Maam, this is at least the 10th time I've had to tell you we don't take silver.
Housewife: You don't understand, my husband is crazy. We're not allowed to keep the Judefetzen he says, it must be turned into shiny objects immediately.
Cashier: I'm not sure what you just said, but we take cash or plastic.
Housewife: Please, PLESAE! Each shiny relic is worth $33. I'll let them go on trade fo $25. It's going to the moon...any day now. Use it to buy a truck to back up. BEEP BEEP!
Cashier: I'm going to have to ask you to leave.
Housewife: No, no, PLEASE. If I don't come home with this cart full of canned ham and a shovel, he'll beat me again.

Wed, 01/25/2012 - 17:34 | 2097765 trav7777
trav7777's picture

ROTFL

Wed, 01/25/2012 - 17:39 | 2097789 tmosley
tmosley's picture

What kind of idiot would spend his silver now?

Wed, 01/25/2012 - 18:05 | 2097893 RockyRacoon
RockyRacoon's picture

Spend silver?  Ha!  That's nuts.

I just picked up 10 more rolls of nickels at the bank today.

When the Mint announces new alloys (or plastic) the nickels will disappear from coinage just like silver did.

Wed, 01/25/2012 - 23:13 | 2098658 disabledvet
disabledvet's picture

Gary Gensler...when he's not stealing it from Bill Fleckenstein.

Wed, 01/25/2012 - 17:40 | 2097791 SheepDog-One
SheepDog-One's picture

Interesting point...I have PM's but who really takes them in trade? Its definitely for holding thru a currency collapse event to the other side, but for people who think they trade it for food or whatever, just try it at the grocery store today and see how it works. They'll look at you funny. But its supposed to be a means of trade during real bad times? Dont really see it.

Wed, 01/25/2012 - 18:07 | 2097898 RockyRacoon
RockyRacoon's picture

I can slide a silver dime or quarter across the counter at my local farmer's market and get a nice batch of fresh veggies.   Try it.   They all know the score.

Thu, 01/26/2012 - 01:18 | 2098888 GFKjunior
GFKjunior's picture

I agree, I've seen people use gold AE's to buy guns at local gun shows. I've even seen pawnshops trade them for other items.

 

We all know what they're worth, people who don't would obviously have nothing to offer us anyway.

Thu, 01/26/2012 - 04:04 | 2098983 GoinFawr
GoinFawr's picture

Bingo! (note the capital)

Wed, 01/25/2012 - 18:07 | 2097900 CapitalistRock
CapitalistRock's picture

Silver trades just fine. The problem is that you can't trade it with sheep. APMEX is constantly offering fiat for my vaulted silver. It's not for holding until doomsday. It's for holding until you need some fiat that can actually buy something.

Wed, 01/25/2012 - 18:59 | 2098036 SheepDog-One
SheepDog-One's picture

It just goes to show the insanity...theyll refuse to take a $50 gold coin (worth $1,700) which is perfectly legal as any other coin or fiat paper, but happily accept the paper.

Thats why guns and ammo are also very important...people, even smart people, are retarded as hell.

Wed, 01/25/2012 - 21:56 | 2098453 trav7777
trav7777's picture

hand a gold coin to a south american and their eyes light up.

Americans think paper rules, that's fine...everywhere isn't america.  U can get gold watches, gold pens, gold cufflinks, gold lots of stuff, for relatively near melt.

Wed, 01/25/2012 - 18:20 | 2097952 Poetic injustice
Poetic injustice's picture

It's hedge, all about risk management. 1/3 fiat, 1/3 guns and canned food, 1/3 gold/silver.

Wed, 01/25/2012 - 19:05 | 2098051 A Lunatic
A Lunatic's picture

A local gun store in my area will trade silver/gold for guns and related merchandise.........wisely so as it's a decidedly lop sided trade, in his favor.

Wed, 01/25/2012 - 18:23 | 2097965 Milton William ...
Milton William Cooper's picture

I'm sure the citizens of 1920s Germany are ROTFL right now

Wed, 01/25/2012 - 19:06 | 2098057 A Lunatic
A Lunatic's picture

At least the ones who are not bars of soap.

Wed, 01/25/2012 - 19:23 | 2098100 SheepDog-One
SheepDog-One's picture

People always say that theyve sure learned their lesson this time....fact is they never learn shit and run right back to what got em in trouble.

Wed, 01/25/2012 - 21:24 | 2098379 Stax Edwards
Stax Edwards's picture

Priceless!

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